Biden administration to probe top US airlines’ rewards schemes

[yonasl]

From the FT:

The Biden administration has launched a probe into the loyalty programmes run by the four largest US airlines aimed at making sure customers do not fall foul of potential “unfair” or “anti-competitive” practices.

The transport department said on Thursday it sent letters to American Airlines, Delta Air Lines, Southwest Airlines and United Airlines, ordering them to provide information about the policies and practices attached to their rewards programmes.

The inquiry will investigate the way such schemes, which usually offer perks in exchange for points accumulated by using the airline’s co-branded credit card or flying with the company, are affected by hidden pricing, extra fees, the devaluation of accumulated rewards and decreased competition.

Transportation secretary Pete Buttigieg said that while “these programmes bring real value to consumers” the “rewards are controlled by a company that can unilaterally change their value”.

[yonasl]

Same from Bberg:

The rewards programs of the four largest US air carriers are being probed by the US government as it seeks to understand how consumers “are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees and reduced competition and choice.” The probe would be the first extensive government look at the programs that have expanded to produce billions of dollars for airlines annually—in some cases adding more revenue than flight operations. Federal regulators could demand changes that might disrupt these profit centers for both carriers and credit-card issuers, and remove a travel option highly valued by consumers.

[BJ]

They’ll probably have forgotten about it by sunrise tomorrow.

[Jon]

Off-topic (sorry) but interesting difference in tone between FT and Bloomberg in the quotes above – “the Biden administration” vs “the US government’. I’ve thought for a while now that part of the problem with politics (and, well, pretty much everything lol) is the way it has all become so personal – Biden, Trump, Boris, Sunak, Starmer etc etc, everything is blamed on or attributed to the leader, rather than to the government (or the country, even, in the case of international matters or foreign policy etc). Was it ever thus? Maybe I’m just mis-remembering, but I’m sure it never used to be? Things came from “the government”, and the government acted on behalf of the country. Maybe there’d be less divisiveness if more news outlets referred to the government rather than the whoever administration? Anyway, sorry for digressing 😉 Just an observation 🙂

[BBbetter]

In the US, using president name can be common as the executive is different from legislature and each have their own powers, checks and balances. If an action is taken, it’s good to identify who is initiating it.

In parliamentary democracies, the ruling party is effectively the same as legislature, so it’s not essential and doesn’t make sense.

But with every aspect of culture getting Americanised, journalism is no exception.

[Lady London]

Absolutely excellent news.

I just wish they could have found a way to add hotels.com to that list.

[BBbetter]

@LadyLondon, better news would be if they follow us capping interchange rates.

[Lady London]

Mmmm BBB, not if we want to keep benefits on cards aspirational.

Even if there a few false starts and will be years of delay on this, it’s good to give these dishonest customer- abusive schemes a shot across the bows, that scrutiny is gonna come on this.

Like @Paul I think it can’t come too soon and unlike @meta, if there are fundamentally unfair terms and conditions in these schemes such as the “We can change your rewards at will”, it doesn’t matter whether the customer should have read and fully understood the potential full negative scope of the terms, there should be external protection from them being used in unfair ways.

[meta]

@LadyLondon you completely misunderstood my point on the other thread about hotels.com. I am all for these terms to be banned.

However, while those terms might be unfair, they were not changed suddenly. Granted protracted announcements were ambiguous, but they are enough to throw doubt in any legal case and when in doubt judges will generally rule as neutrally as possible. Any judge will ask why someone waited to be switched to the new scheme or ask for compensation. Email sent in April with clear range of dates for the switch and what the terms will be. If you held a booking, you should have complained immediately. Anyone with common sense should have stopped booking via hotels.com for 2024 onwards really. It is also the case of enforcement if the judge rules in your favour. And that’s when also the question of legal costs comes into play. They could play you ten times over if you don’t know what you’re doing. It isn’t UK261 claim.

Second option is to negotiate with legally illiterate customer service agents/supervisors and management. You can throw legalese at them, but they simply don’t understand it.

So it’s better to appeal to their emotion and be quick! (apart from airlines, they fully understand what they are doing!)

[BBbetter]

Interestingly (obvious if I think about it), the travel bloggers in US get very defensive whenever there is talk of regulation.
They claim common public will suffer with over regulation, but in reality they are just worried about their business and money making opportunities if interchange fees and loyalty programs are regulated.

[Super Secret Stuff]

Between this and IAG going through there VAT case with HMRC, I hope their panicking! Constantly making things worse when someone is already committed is always unfair on a consumer IMO. Just wish the CMA would look follow the US and look into it. Still I think it’s enough to make IAG more cautious at anything there planning